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Outline two characteristics of a private limited company: (i) (ii) - Leaving Cert Business - Question 1 - 2013
Question 1
Outline two characteristics of a private limited company: (i) (ii)
Worked Solution & Example Answer:Outline two characteristics of a private limited company: (i) (ii) - Leaving Cert Business - Question 1 - 2013
Step 1
(i) The shareholders have limited liability, which means that they are only responsible for the debts of the company, up to their original investment in it, if it goes bankrupt.
Answer
This characteristic ensures that shareholders are protected from losing more than the amount they invested in the company. In the event of financial difficulties, their personal assets remain safe, providing a security blanket for investors.
Step 2
(ii) A private limited company is incorporated, which means it has a separate legal existence from its owners and can sue and be sued in its own right.
Answer
This separation allows the company to engage in contracts, own assets, and face legal actions independently of its shareholders. It enhances credibility and facilitates business operations.